When you are in a dangerous amount of debt, it can be hard to see the wood for the trees. If you are under pressure, you are more likely to stop thinking straight. It can sometimes seem easier to ignore things rather than attack them head-on. However, ignoring your debts is something you should never do as it can lead to severe consequences that may follow you for the rest of your life.
In this guide, we’re going to show you how to get through this sticky period. All it takes is focus and dedication, and you will soon be in a much better position. The quicker you get started, the better – so let’s jump in at the deep end and find out how you can simplify your debt problems.
List all of your debts
People that are heavily in debt tend to owe money to more than one lender. So, the first step is to become more organized and make a list of everybody you owe money to. Include statements from utility companies, too. Even though you may not owe them money, it is still a payment that you need to make, so your gas, electricity and others should all be included. To make sure you have everything on your list, apply to see your credit report at one of the three major reference agencies.
Some debts are more dangerous than others, so prioritizing them in some kind of order is essential. For example, loan company Reliance Tax Loans specialize in lending money to pay for real estate taxes. They state that if you don’t pay your property taxes, you could end up losing your home and face severe fines. So, place this type of debt and any other secured debt that could see you losing your home or possessions at the top of your list. Your next priority is those debts that are costing you more – a high-interest rate on a loan, for example. Finally, add your other debts that haven’t reached an emergency level yet – you can tackle these at a later stage.
Work out a repayment plan
The first step towards making a repayment plan involves working out how much per month you can afford to pay back. The figure you come up with should be realistic enough to achieve, but should also be high enough to start making a difference. It is more than likely that you will have to adjust your lifestyle to afford your repayments, so be prepared to make some tough decisions.
Contact your creditors
Using your list, start to contact your creditors to notify them of your intentions. If you have been honest with outgoings, most will be happy to put a repayment plan in place. Pay the most money towards the debts that are more serious, and the least money towards those that are less of a risk. It won’t take long before you start feeling you are making inroads. As long as you keep paying the same amount of money each month, you will begin to regain some control. Once those dangerous and expensive debts have been paid off, you can use the money to pay off the others.
We hope this has been helpful – good luck!